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What's Driving Wal-Mart's Global Expansion?

What's Driving Wal-Mart's Global Expansion?

Let's say you could know just one fact about Wal-Mart's non-U.S. presence. Here's what I would emphasize:

“If you break out Wal-Mart International as a separate company, last year it was $109 billion [in revenues], which makes it the third largest retailer in the world [the largest is Walmart U.S.].”

That observation came from Norbert Hsu, vice president of international strategy, Wal-Mart Stores, in comments at last month's Grocery Manufacturers Association Executive Conference. Hsu's quote underscores the breadth of the giant retailer's fast-growing global presence, which now takes in 14 countries outside the continental U.S.

What's driving this expansion? Hsu said growth is fueled by partnering with suppliers and analyzing individual country trends.

“I believe there's really an opportunity to partner to understand where we can take brands and innovations to markets outside of the U.S.,” he said.

Among partnership examples cited, Wal-Mart recently worked with Nestlé to bring the Kit Kat brand to Brazil, and with Clorox to take the Clorox Green Works brand to Japan and Mexico/Central America.

Wal-Mart's decisions on brands and store types are based on a deep understanding of both macro and micro trends, Hsu emphasized. “It all starts with the customer,” he said. “We look at global megatrends, including demographics and macroeconomics. But we also look at the local level because we need to understand the local consumers' needs and wants. That helps us decide what formats to invest in — from supercenters to bodegas — and what merchandising to pursue.”

Macro developments don't always line up with local ones. For example, despite all the talk of the aging worldwide population, “In markets we're in today, some emerging countries are skewed pretty young now with 22 to 45 the median age,” he said. Even in the U.S. and Japan, “we don't see the age changes so dramatic that we need to wholesale re-lay out our stores.”

Suppliers should take note of Hsu's comments because Wal-Mart clearly wants to engage more with partners as it builds international scale.

While Hsu outlines some new directions, his observations actually have a retro feel. Remember the old phrase, “Think globally, act locally?” That appears to be exactly what Wal-Mart is doing by examining big-picture trends but basing decisions on local conditions on the ground. It's a game plan that still makes a lot of sense.

TAGS: News Walmart